IR35 Tax Legislation: A Quick Guide

WHAT YOU NEED TO KNOW ABOUT IR35

A few important IR35 tax legislations took place on 6th April 2017 and here are 5 things worth knowing about:

IR35, also known as the ‘intermediaries legislation’, is a compilation of rules designed by HMRC to ensure that people who offer their services to a client via an intermediary, such as a limited company, pay the same tax and National Insurance as people employed by the client to do the same job on a salaried basis.

After the declaration of changes, if services are delivered to a public sector organisation, such as the NHS, and the contract falls ‘within IR35’, the recruitment agency, or the NHS Trust or Health Board, you’re working for, shall deduct tax and National Insurance contributions from your fee and pay them directly to HMRC.

The NHS Trust or Health Board for which you work, determines which contracted roles are deemed within IR35. To date, all NHS assignments have been considered to be ‘within IR35,’ and therefore, are subjected to legislation.

Tax and National Insurance contributions shall be deducted from all payments made to PSCs (including limited company contractors), for assignments in the public sector, from the effective date i.e. 6th April 2017. Note: Deductions shall not be drawn from payments made to umbrella companies.

Consult an accountant and an umbrella company representative to ensure smooth management after the changes. Alterations in the working arrangements can be considered to minimise the impact of the changes.